Feb sees marked improvement in Indian manufacturing health: PMI data

The seasonally-adjusted HSBC India manufacturing purchasing managers’ index (PMI) rose from 55.4 in January to a four-month high of 56.9 in February. The latest figure was consistent with a marked improvement in the health of the sector.

International sales expanded at a comparatively mild pace, and one that was the weakest in close to a year-and-a-half.

In response to increasing workloads, firms stepped up input purchasing, lifted their inventories and hired extra staff. Cost pressures remained benign, rising at a moderate rate that matched that seen in January.

Output charge inflation ticked higher, however, and outpaced its long-run average.

Goods producers indicated that demand buoyancy, marketing initiatives and rising client requirements underpinned another expansion in new business intakes. Moreover, the pace of growth was historically elevated and the strongest since last October, a release from S&P Global, which compiled the PMO data, said.

Output also rose at the fastest pace in four months and one that was above its long-run average. According to panel members, efficiency improvements, healthy underlying demand, rising intakes of new work and tech investment collectively boosted production volumes.

One area where growth took a step back was new export orders. February's increase was the slowest in 17 months, with the rate of expansion broadly converging towards its long-run average. Where external sales rose, monitored companies cited gains from Asia, Europe the Middle East and the United States.

With total new orders continuing to expand sharply, manufacturers in India purchased additional material to supplement production and add to inventories. Buying levels rose at the fastest pace in three months.

Concurrently, pre-production inventories increased to a greater extent in February. The rate of accumulation was sharp and well above its long-run trend.

Factory employment expanded only slightly, but nevertheless at the quickest pace in four months. One factor that supported additional hiring was a further increase in outstanding business volumes at manufacturers in India.

Year-ahead assessments of output volumes remained positive as 16 per cent of companies forecasts growth and less than 1 per cent anticipates a reduction.

Fibre2Fashion News Desk (DS)